NEW DELHI: Indian tycoon Ratan Tata lashed out at a “venal” business climate and a top foreign investor condemned “nightmare” red tape as the government won a vote on allowing in more foreign investment.
The problems of operating in famously corrupt and bureaucratic India were raised as the minority government survived a final parliamentary vote to let in foreign supermarkets — a key plank of its renewed economic reform agenda.
Tata, outgoing head of the Tata $ 100-billion tea-to-steel empire and known as patriarch of India’s business community, said his successor, Cyrus Mistry, would face a major struggle not to compromise the group’s well-known ethical standards and surrender to a “venal system.”
Separately, the head of British shoemaker Pavers, one of the first retailers to be allowed to operate in India under new 100-percent foreign ownership rules, said navigating the nation’s overwhelming red tape was a “nightmare.”
“Regulations are a nightmare for every retailer whether from outside India or the domestic retailer,” Stuart Pavers, president of the family-owned firm, told India’s Mint newspaper in an interview.
Congress Premier Manmohan Singh’s government is seeking to steer a string of reforms through parliament that aim to open up sectors such as retail, insurance and aviation to foreign investors and make it easier to do business.
But the business chiefs said the government will have to work hard to improve the corporate environment for investors — even with the lure of a growing middle class increasingly adopting Western trends and tastes.
India has long been criticized as one Asia’s most inefficient bureaucracies, with its byzantine regulations, widespread corruption and political dysfunction seen as major deterrents to foreign investment.
Several months ago, one of India’s top businessmen, N. R. Narayana Murthy, chairman emeritus of software giant Infosys, voiced similar strong complaints, saying India had “cut (its) own legs off” with suffocating regulation.
Tata, who retires December 28 when he turns 75, noted it still took the best part of a decade to gain clearance for major projects and this was deterring foreign investors.
“Different agencies in the government have almost contradictory interpretations of the law, or interpretations of what should be done,” Tata told the London-based Financial Times.
Tata accused Singh of forcing the group to look abroad by failing to address complaints about bureaucracy and told the Financial Times the conglomerate planned to turn to other emerging markets for expansion.
“These are things which by and large would drive investors away in most other countries,” he added.
Tata contrasted the government’s attitude toward its industrial sector with that of neighboring emerging market giant China where the group recently opened a Jaguar Land Rover factory.
“There’s a great, marked difference (in) government support,” he said.
“If we had the same kind of encouragement to industry... I think India could compete definitely with China.”
Sweden’s IKEA group is still struggling to jump through bureaucratic hoops to set up shop in the world’s second-most populous nation and one of the furniture retailer’s last untapped large markets.
Indian media recently reported that the government had imposed sweeping curbs on what IKEA can sell at its planned new stores, including a ban on its famed meatballs.

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